HR Management & Compliance

Wage and Hour: How Do We Sort Out Holiday Pay?

We’re having trouble getting our holiday pay policy clarified. If our employees don’t work on a holiday, they get paid straight time for their normal hours for the holiday. If they do work on a holiday, do they get time and one-half for the hours worked on the holiday plus the straight time holiday pay? And if the holiday hours are overtime hours, how much do they get—time and one-half on the straight hours of holiday pay plus time and one-half for the holiday hours? I’m sure this is simple, but I can’t seem to geta handle on it. — Alan in Riverside

The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.

We entrusted this question to Lloyd W. Aubry, Jr.

California law provides that certain days—such as Martin Luther King Day, Memorial Day, July 4th, and Christmas Day—are state holidays, and therefore, state facilities are closed on those days. These provisions, however, apply only to public entities, and private sector employers are not required to recognize any or all of these holidays or provide paid holidays to employees for those particular holidays. The requirement to pay holiday pay is purely a matter of contract between the employer and the employee. Accordingly, there is no legal requirement that if employees work on a particular holiday, they must receive time and one-half for the hours worked.

That being said, most private sector employers do provide paid holidays for certain days of the year. The employer’s policy will determine whether employees are paid straight time or time and one-half for working on a particular holiday. An employer could have a policy of paying employees time and one-half if they work on a particular holiday, plus giving straight-time pay for the holiday missed or permitting employees to substitute another day off for the missed holiday.

Under state and federal law, holiday pay does not count for computing either hours worked or overtime to be paid. Only hours actually worked count toward determining whether there is an overtime liability. However, once again, some employers do provide as an employer policy that holidays (e.g., 8 hours) are included in determining whether overtime pay is owed for that work week.

In summary, the answers to your question should be found in your policies. If they’re not clear, take time now to revise them. You don’t want ambiguity where pay and overtime are concerned.

Lloyd W. Aubry, Jr., a former California labor commissioner, is of counsel at the San Francisco office of Morrison & Foerster.

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